Monday, July 27, 2009

What happened to the availability of jobs during the Great Depression?

Did the peopl lose their jobs becuase the buisnesses had to close down? Or was it because of something else?

What happened to the availability of jobs during the Great Depression?
The Great Depression was an economic slump in North America, Europe, and other industrialized areas of the world that began in 1929 and lasted until about 1939. It was the longest and most severe depression ever experienced by the industrialized Western world.





Though the U.S. economy had gone into depression six months earlier, the Great Depression may be said to have begun with a catastrophic collapse of stock-market prices on the New York Stock Exchange in October 1929. During the next three years stock prices in the United States continued to fall, until by late 1932 they had dropped to only about 20 percent of their value in 1929. Besides ruining many thousands of individual investors, this precipitous decline in the value of assets greatly strained banks and other financial institutions, particularly those holding stocks in their portfolios. Many banks were consequently forced into insolvency; by 1933, 11,000 of the United States' 25,000 banks had failed. The failure of so many banks, combined with a general and nationwide loss of confidence in the economy, led to much-reduced levels of spending and demand and hence of production, thus aggravating the downward spiral. The result was drastically falling output and drastically rising unemployment; by 1932, U.S. manufacturing output had fallen to 54 percent of its 1929 level, and unemployment had risen to between 12 and 15 million workers, or 25-30 percent of the work force.





The Great Depression began in the United States but quickly turned into a worldwide economic slump owing to the special and intimate relationships that had been forged between the United States and European economies after World War I. The United States had emerged from the war as the major creditor and financier of postwar Europe, whose national economies had been greatly weakened by the war itself, by war debts, and, in the case of Germany and other defeated nations, by the need to pay war reparations. So once the American economy slumped and the flow of American investment credits to Europe dried up, prosperity tended to collapse there as well. The Depression hit hardest those nations that were most deeply indebted to the United States, i.e., Germany and Great Britain. In Germany, unemployment rose sharply beginning in late 1929, and by early 1932 it had reached 6 million workers, or 25 percent of the work force. Britain was less severely affected, but its industrial and export sectors remained seriously depressed until World War II. Many other countries had been affected by the slump by 1931.





Almost all nations sought to protect their domestic production by imposing tariffs, raising existing ones, and setting quotas on foreign imports. The effect of these restrictive measures was to greatly reduce the volume of international trade: by 1932 the total value of world trade had fallen by more than half as country after country took measures against the importation of foreign goods.





The Great Depression had important consequences in the political sphere. In the United States, economic distress led to the election of the Democrat Franklin D. Roosevelt to the presidency in late 1932. Roosevelt introduced a number of major changes in the structure of the American economy, using increased government regulation and massive public-works projects to promote a recovery. But despite this active intervention, mass unemployment and economic stagnation continued, though on a somewhat reduced scale, with about 15 percent of the work force still unemployed in 1939 at the outbreak of World War II. After that, unemployment dropped rapidly as American factories were flooded with orders from overseas for armaments and munitions. The depression ended completely soon after the United States' entry into World War II in 1941. In Europe, the Great Depression strengthened extremist forces and lowered the prestige of liberal democracy. In Germany, economic distress directly contributed to Adolf Hitler's rise to power in 1933. The Nazis' public-works projects and their rapid expansion of munitions production ended the Depression there by 1936.





At least in part, the Great Depression was caused by underlying weaknesses and imbalances within the U.S. economy that had been obscured by the boom psychology and speculative euphoria of the 1920s. The Depression exposed those weaknesses, as it did the inability of the nation's political and financial institutions to cope with the vicious downward economic cycle that had set in by 1930. Prior to the Great Depression, governments traditionally took little or no action in times of business downturn, relying instead on impersonal market forces to achieve the necessary economic correction. But market forces alone proved unable to achieve the desired recovery in the early years of the Great Depression, and this painful discovery eventually inspired some fundamental changes in the United States' economic structure. After the Great Depression, government action, whether in the form of taxation, industrial regulation, public works, social insurance, social-welfare services, or deficit spending, came to assume a principal role in ensuring economic stability in most industrial nations with market economies.





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The International Depression





The Great Depression of 1929-33 was the most severe economic crisis of modern times. Millions of people lost their jobs, and many farmers and businesses were bankrupted. Industrialized nations and those supplying primary products (food and raw materials) were all affected in one way or another. In Germany the United States industrial output fell by about 50 per cent, and between 25 and 33 per cent of the industrial labour force was unemployed.





The Depression was eventually to cause a complete turn-around in economic theory and government policy. In the 1920s governments and business people largely believed, as they had since the 19th century, that prosperity resulted from the least possible government intervention in the domestic economy, from open international relations with little trade discrimination, and from currencies that were fixed in value and readily convertible. Few people would continue to believe this in the 1930s.





THE MAIN AREAS OF DEPRESSION





The US economy had experienced rapid economic growth and financial excess in the late 1920s, and initially the economic downturn was seen as simply part of the boom-bust-boom cycle. Unexpectedly, however, output continued to fall for three and a half years, by which time half of the population was in desperate circumstances (map1). It also became clear that there had been serious over-production in agriculture, leading to falling prices and a rising debt among farmers. At the same time there was a major banking crisis, including the "Wall Street Crash" in October 1929. The situation was aggravated by serious policy mistakes of the Federal Reserve Board, which led to a fall in money supply and further contraction of the economy.








Map 1








The economic situation in Germany (map2) was made worse by the enormous debt with which the country had been burdened following the First World War. It had been forced to borrow heavily in order to pay "reparations" to the victorious European powers, as demanded by the Treat of Versailles (1919), and also to pay for industrial reconstruction. When the American economy fell into depression, US banks recalled their loans, causing the German banking system to collapse.








Map 2








Countries that were dependent on the export of primary products, such as those in Latin America, were already suffering a depression in the late l920s. More efficient farming methods and technological changes meant that the supply of agricultural products was rising faster than demand, and prices were falling as a consequence. Initially, the governments of the producer countries stockpiled their products. but this depended on loans from the USA and Europe. When these were recalled, the stockpiles were released onto the market, causing prices to collapse and the income of the primary-producing countries to fall drastically (map3).








Map 3








NEW INTERVENTIONIST POLICIES





The Depression spread rapidly around the world because the responses made by governments were flawed. When faced with falling export earnings they overreacted and severely increased tariffs on imports, thus further reducing trade. Moreover, since deflation was the only policy supported by economic theory at the time, the initial response of every government was to cut their spending. As a result consumer demand fell even further. Deflationary policies were critically linked to exchange rates. Under the Gold Standard, which linked currencies to the value of gold, governments were committed to maintaining fixed exchange rates. However, during the Depression they were forced to keep interest rates high to persuade banks to buy and hold their currency. Since prices were falling, interest-rate repayments rose in real terms, making it too expensive for both businesses and individuals to borrow.





The First World War had led to such political mistrust that international action to halt the Depression was impossible to achieve In 1931 banks in the United States started to withdraw funds from Europe, leading to the selling of European currencies and the collapse of many European banks. At this point governments either introduced exchange control (as in Germany) or devalued the currency (as in Britain) to stop further runs. As a consequence of this action the gold standard collapsed (map 4).








Map 4





The gold standard linked currencies to the value of gold,


and was supported by almost every country in the world.


From 1931, however, countries began to leave the


standard, leading to its total collapse by 1936. Although


at the time this was seen as a disaster, it actually presented


opportunities for recovery in many countries, allowing


governments to intervene to create economic growth.





POLITICAL IMPLICATIONS





The Depression had profound political implications. In countries such as Germany and Japan, reaction to the Depression brought about the rise to power of militarist governments who adopted the regressive foreign policies that led to the Second World War. In countries such as the United States and Britain, government intervention ultimately resulted in the creation of welfare systems and the managed economies of the period following the Second World War.





In the United States Roosevelt became President in 1933 and promised a "New Deal" under which the government would intervene to reduce unemployment by work-creation schemes such as street cleaning and the painting of post offices. Both agriculture and industry were supported by policies (which turned out to be mistaken) to restrict output and increase prices. The most durable legacy of the New Deal was the great public works projects such as the Hoover Dam and the introduction by the Tennessee Valley Authority of flood control, electric power, fertilizer, and even education to a depressed agricultural region in the south.





The New Deal was not, in the main, an early example of economic management, and it did not lead to rapid recovery. Income per capita was no higher in 1939 than in 1929, although the government’s welfare and public works policies did benefit many of the most needy people. The big growth in the US economy was, in fact, due to rearmament.





In Germany Hitler adopted policies that were more interventionist, developing a massive work-creation scheme that had largely eradicated unemployment by 1936. In the same year rearmament, paid for by government borrowing, started in earnest. In order to keep down inflation, consumption was restricted by rationing and trade controls. By 1939 the Germans’ Gross National Product was 51 per cent higher than in 1929 — an increase due mainly to the manufacture of armaments and machinery.





THE COLLAPSE OF WORLD TRADE





The German case is an extreme example of what happened virtually everywhere in the 1930s. The international economy broke up into trading blocs determined by political allegiances and the currency in which they traded. Trade between the blocs was limited, with world trade in 1939 still below its 1929 level. Although the global economy did eventually recover from the Depression, it was at considerable cost to international economic relations and to political stability.





in U.S. history, the severe economic crisis supposedly precipitated by the U.S. stock-market crash of 1929. Although it shared the basic characteristics of other such crises (see depression), the Great Depression was unprecedented in its length and in the wholesale poverty and tragedy it inflicted on society. Economists have disagreed over its causes, but certain causative factors are generally accepted. The prosperity of the 1920s was unevenly distributed among the various parts of the American economy–farmers and unskilled workers were notably excluded–with the result that the nation's productive capacity was greater than its capacity to consume. In addition, the tariff and war-debt policies of the Republican administrations of the 1920s had cut down the foreign market for American goods. Finally, easy-money policies led to an inordinate expansion of credit and installment buying and fantastic speculation in the stock market. The American depression produced severe effects abroad, especially in Europe, where many countries had not fully recovered from the aftermath of World War I; in Germany, the economic disaster and resulting social dislocation contributed to the rise of Adolf Hitler. In the United States, at the depth (1932—33) of the depression, there were 16 million unemployed–about one third of the available labor force. The gross national product declined from the 1929 figure of $103,828,000,000 to $55,760,000,000 in 1933. The economic, agricultural, and relief policies of the New Deal administration under President Franklin Delano Roosevelt did a great deal to mitigate the effects of the depression and, most importantly, to restore a sense of confidence to the American people. Yet it is generally agreed that complete business recovery was not achieved and unemployment ended until the government began to spend heavily for defense in the early 1940s.1929 October -- The stock market crashes, marking the end of six years of unparalleled prosperity for most sectors of the American economy. The "crash" began on October 24 (Black Thursday). By October 29, stock prices had plummeted and banks were calling in loans. An estimated $30 billion in stock values "disappeared" by mid-November.


November -- "Any lack of confidence in the economic future or the basic strength of business in the United States is foolish."--President Herbert Hoover


1930 March -- More than 3.2 million people are unemployed, up from 1.5 million before the "crash" of October, 1929. President Hoover remained optimistic however stating that "all the evidences indicate that the worst effects of the crash upon unemployment will have passed during the next sixty days."


November -- The street corners of New York City are crowded with apple-sellers. Nearly six thousand unemployed individuals worked at selling apples for five cents apiece.


1931 January -- Texas congressman Wright Patman introduces legislation authorizing immediate payment of "bonus" funds to veterans of World War I. The "bonus bill" had been passed in 1924. It allotted bonuses, in the form of "adjusted service certificates," equaling $1 a day for each day of service in the U.S., and $1.25 for each day overseas. President Hoover was against payment of these funds, saying it would cost the Treasury $4 billion.


February -- "Food riots" begin to break out in parts of the U.S. In Minneapolis, several hundred men and women smashed the windows of a grocery market and made off with fruit, canned goods, bacon, and ham. One of the store's owners pulled out a gun to stop the looters, but was leapt upon and had his arm broken. The "riot" was brought under control by 100 policemen. Seven people were arrested.





Resentment of "foreign" workers increases along with unemployment rolls. In Los Angeles, California, Mexican Americans found themselves being accused of stealing jobs from "real" Americans. During the month, 6,024 of them were deported.


March -- Three thousand unemployed workers march on the Ford Motor Company's plant in River Rouge, Michigan. Dearborn police and Ford's company guards attack, killing four workers and injuring many more.


December -- New York's Bank of the United States collapses. At the time of the collapse, the bank had over $200 million in deposits, making it the largest single bank failure in the nation's history.


1932 January -- Congress establishes the Reconstruction Finance Corporation. The R.F.C. was allowed to lend $2 billion to banks, insurance companies, building and loan associations, agricultural credit organizations and railroads. Critics of the R.F.C. called it "the millionaires' dole."


April -- More than 750,000 New Yorkers are reported to be dependent upon city relief, with an additional 160,000 on a waiting list. Expenditures averaged about $8.20 per month for each person on relief.


May -- More than 300 World War I vets leave Portland, Oregon en route to Washington, D.C. to urge Congress to pass the Bonus Bill. It took them eighteen days to reach Washington, D.C.


June -- Determined to collect their "bonus" pay for service, between 15,000 to 25,000 World War I veterans gather and begin setting up encampments near the White House and the Capitol in Washington, D.C. On June 15, the House passed Congressman Wright Patman's "bonus bill" by a vote of 209 to 176. The bill fell to defeat in the Senate, however, 62 to 18. The vets maintained their determination to stay camped out until they got their pay.


July -- Hoover signs a $100,000 transportation bill to assist "bonus Army" demonstrators in getting home. Hoover set a July 24 deadline for the men to abandon their encampments. On July 28, when some "bonus Army" members resisted being moved from their camps. Violence erupted, leading to the deaths of two veterans. Hoover ordered Federal troops, under the command of General Douglas MacArthur, to assist D.C. police in clearing the veterans.


July -- The Reconstruction Finance Corporation is authorized to lend needy states sums from the national Treasury. The money was to target relief and public works projects.


November -- Franklin Delano Roosevelt is elected President in a landslide over Herbert Hoover. Roosevelt received 22,800,000 popular votes to 15,750,000 for Hoover.


933 March -- Before a crowd of 100,000 at the Capitol Plaza in Washington, D.C., Franklin Delano Roosevelt is inaugurated president. FDR tells the crowd, "The people of the United States have not failed. In their need they have registered a mandate that they want direct, vigorous action. They have asked for discipline and direction under leadership. They have made me the present instrument of their wishes. In the spirit of the gift I take it."





FDR announces a four-day bank holiday to begin on Monday, March 6. During that time, FDR promised, Congress would work on coming up with a plan to save the failing banking industry. By March 9, Congress passed the Emergency Banking Act of 1933. By month's end, three-quarters of the nation's closed banks were back in business.





On March 12, FDR delivers the first of what came to be known as his "fireside chats." In his initial "chat" he appealed to the nation to join him in "banishing fear."


April -- President Roosevelt, under the Emergency Banking Act, orders the nation off of the gold standard.





The Civilian Conservation Corps (CCC) is established. Designed as a relief and employment program for young men between the ages of 17 and 27, the CCC was envisioned by FDR as a kind of volunteer "army" that would work in national forests, parks, and federal land for nine-month stints. The first 250,000 young men were housed in 1,468 camps around the country. At its peak in 1935, the CCC would include 500,000 young men.


May -- The Federal Emergency Relief Administration is created by Congress. President Franklin Roosevelt appointed Harry L. Hopkins as its chief administrator. By the end of his first day on the job, Hopkins had issued grants totaling more than $5 million.





The National Industrial Recovery Act is introduced into Congress. Under Title I of the act, the National Recovery Administration was designated to maintain some form of price and wage controls. Section 7(a) of the act guaranteed labor the right to organize and bargain collectively. As part of the act, The National Labor Board was set up to negotiate disputes between labor and management.





The Tennessee Valley Authority is created. A federally run hydroelectric power program, the TVA act was considered a huge experiment in social planning. The TVA also built dams, produced and sold fertilizer, reforested the Tennessee Valley area, and developed recreational lands. Opponents of the TVA called it "communistic to its core."


June -- Congress passes the Glass-Steagall act that separated commercial from investment banking and set up the Federal Deposit Insurance Corporation to guarantee bank deposits.


August -- With an eye toward organizing farmers into soil conservation districts, the federal government establishes the Soil Erosion Service. The creation of this service was made necessary by the years of drought and dust that plagued the Southwestern Panhandle states.


September -- In an effort to stabilize prices, the federal agricultural program orders the slaughter of more than 6 million pigs. Many citizens protested this action since most of the meat went to waste.


October -- The Civil Works Administration is established. Devised as a wide scale program that could employ up to 4 million people, the C.W.A was involved in the building of bridges, schools, hospitals, airports, parks and playgrounds. Additionally, C.W.A. funds went toward the repair and construction of highways and roads. Early in 1934, Congress authorized $950 million for the continued operation of the C.W.A.


1934 May -- A three-day dust storm blows an estimated 350 million tons of soil off of the terrain of the West and Southwest and deposits it as far east as New York and Boston. Some East Coast cities were forced to ignite street lamps during the day to see through the blowing dust.


November -- Father Charles E. Coughlin establishes the Union for Social Justice. Using the radio airwaves as his pulpit, Father Coughlin railed against "predatory capitalism." His criticism of the banking industry and disdain of communism soon dovetailed into a troubling gospel of anti-Semitism.


1935 April -- FDR signs legislation creating the Works Progress Administration. (Its name would be changed in 1939 to the Work Projects Administration). The program employed more than 8.5 million individuals in three thousand counties across the nation. These individuals, drawing a salary of only $41.57 a month, improved or created highways, roads, bridges, and airports. In addition, the WPA put thousands of artists -- writers, painters, theater directors, and sculptors -- to work on various projects. The WPA would remain in existence until 1943.





"Business Week" magazine announces that "Depression is a forgotten word in the automobile industry, which is forging ahead in production, retail sales, and expansion of productive capacity in a manner reminiscent of the 'twenties.'"


June -- The National Youth Administration is set up to address the needs of young men and women (who were not allowed in the CCC). The NYA worked on two levels: a student work program and an out-of-school program. The student work program provided students with odd jobs that paid them enough to stay in school. The out-of-school program set young people up with various jobs ranging from house painting to cleaning local parks, and eventually came to include vocational training.


July -- FDR signs the Wagner National Labor Relations Act. The goal of the act was to validate union authority and supervise union elections.


August -- The Social Security Act of 1935 is signed into law by FDR. Among the most controversial stipulations of the act was that Social Security would be financed through a payroll tax. Historian Kenneth S. Davis called the signing of the act "one of the major turning points of American history. No longer could `rugged individualism' convincingly insist that government, though obliged to provide a climate favorable for the growth of business profits, had no responsibility whatever for the welfare of the human beings who did the work from which the profit was reaped."


1936 March -- Photographer Dorothea Lange visits a pea-pickers' camp in California's San Joaquin Valley and takes photographs of harvest workers. The images, especially those in the "Migrant Mother Series," vividly illustrated the plight of the workers. The San Francisco News ran the photo essay under the headline, "Ragged, Hungry, Broke, Harvest Workers Live in Squallor (sic)."


October -- The San Francisco News publishes a series of articles written by John Steinbeck called "The Harvest Gypsies." The series explored the hardships faced by those living and working in migrant labor camps. Steinbeck wrote, "...One has only to go into the squatters' camps where the families live on the ground and have no homes...to look at the strong purposeful faces, often filled with pain...to know that this new race is here to stay and that heed must be taken of it."


November -- FDR is elected to his second term as president, winning every state in the Union except Maine and Vermont. FDR defeated Kansas Governor Alfred M. Landon.


1937 January -- United Automobile Workers strike at the General Motors Plant in Flint, Michigan. The strike turned violent when strikers clashed with company-hired police.


May -- Ten people are killed and a dozen more are wounded in the "Memorial Day Massacre" at Republic Steel's South Chicago plant. Workers and their families had tried to combine a picnic with a rally and demonstration.


March -- The slow economic recovery made possible by New Deal programs suffers a setback as unemployment rises. FDR's detractors called it the start of the "Roosevelt recession."


1938 April -- FDR asks Congress to authorize 3.75 billion in federal spending to stimulate the sagging economy. Economic indicators responded favorably over the next few months. Still, unemployment remained high and was predicted to stay that way for some time.


1940 November -- Franklin Roosevelt is elected to an unprecedented third term as president, defeating Wendell Willkie. FDR's victory is seen as proof of the nation's support of his war policies. Roosevelt was lobbying Congress to pass the Lend-Lease Act, which would aid Britain in its struggle to fend off Germany. In little over a year, following Japan's December 1941 bombing of Pearl Harbor, the U.S. would enter the war in the Pacific and in Europe.


The war effort jump-started U.S. industry and effectively ended the Great Depression.
Reply:The rich had lots of money, and the poor had nothing, so there was no happy little middle class of working people. The businesses that made goods didnt have money to pay workers, because no one had enough money to buy their goods. The government decided it would be much better to let the people sort themselves out rather than help, but as we know, people as a race are a self concerned group that could care less about the homeless people of america.
Reply:Many people lost their jobs and many farmers lost their land. However, more women were able to get jobs, as buisnesses were able to pay them lower wages.
Reply:Decreased tremendously


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